The Meaning of Completion

By John B Molloy, LLB(Hons), BSc(Hons), FHKIS, FRICS, ACIArb, Managing Director, James R Knowles
(Hong Kong) Limited

The date of completion of the works is

clearly a matter of great importance to both
employers and contractors. For the former it
indicates the time when they can enter into
occupation and use of the building. For the
latter the end of their responsibility to care
for the works, the beginning of the defects
liability period and importantly the end of
any potential liability for liquidated
damages.
However in the two principle forms of
contract in use in Hong Kong, i.e. the
Government forms and the RICS/RIBA
form, there is no definition as to exactly
what will constitute completion. This is not
as simple a matter as may be expected
because due to the nature of construction
contracts most authorities are agreed that it
is not possible to require that the works are
100% complete before a completion
certificate is issued.
To complicate matters further, both the
Government and RICS forms of contract use
different terminology when referring to
completion.

The RICS form states that the Architect

will issue a Practical Completion
Certificate when the works are
practically complete.
The Hong Kong Government forms
state that the Architect/Engineer will
issue a Completion Certificate when the
works are substantially complete.

But in neither form are the terms defined.

Practical Completion
Authority
suggests
that
Practical
Completion means that the works are fully
completed to a state to permit the Employer
to enter into full beneficial occupation, i.e.
no outstanding works remain to be carried

out save for very minor items of work being

left incomplete on the 'de minimis non curat
lex' (the law does not concern itself with
trifles) principle.
However the difficult question is whether
the phrase covers the situation where the
works are finished (save for very minor
items) but there are also a number of
apparent defects. In this regard a potential
problem arises due to the wording of the
defects clause which provides that the
Architect's power to order the remedying of
defects during the defects liability period is
limited to those defects 'which shall appear'
during that period.
The matter has been considered by the
courts on a number of occasions and the
conclusion appears to be that whilst the
Architect should not certify the Works as
being practically complete when there are
apparent defects:
I think that the word "practically" in
clause 15(1) gave the architect a
discretion to certify that William Press
had fulfilled its obligation under clause
21(1) where very minor de minimis works
had not been carried out, but if there
were any patent defects in what William
Press had done the architect could not
have given a certificate of practical
completion. H W Nevill (Sunblest) Ltd v.
Wm. Press & Son Ltd (1981)
apparent defects of a very trivial nature can
be treated in the same way as outstanding
works, being similarly subject to the same
'de minimis' principle.
In 'Some Building Contract Problems'
Vincent Powell Smith summarises the
position as follows:

In straight forward terms, ......, the

architect is quite justified in issuing his
certificate if he is reasonably satisfied
that the works accord with the contract,
notwithstanding that there are very
minor defects which can be remedied
during the defects liability period.
Substantial Completion
The phrase substantial completion which is
adopted in the Government forms of
contract derives from the United Kingdom
ICE Contract for civil engineering works.
The word substantial when construed with
the other provisions of the completion
clause (GCC Clause 53) requiring the
contractor to provide an undertaking to
carry out outstanding works during the
Maintenance Period, is considered to
indicate completion to a less comprehensive
nature than practical completion under the
RICS form.
Substantial
completion
is
therefore
completion to a state which permits the
employer to enter into functional or
operation occupation, but when minor
outstanding works, which may logically
include remedying defects, remain to be
completed in the Maintenance Period.
As stated above the phrase substantial
completion derives from civil engineering
contracts where functional or occupational
occupation is the Employer's primary
concern. The Employer may be happy to
take over and use a sewage treatment plant
whilst the Contractor is still finishing

painting the doors. However in a building

contract an Employer requires a greater
degree of completion, as tenants will not
accept a Contractor still working in the
premises when the property is taken over.
Private building works are of course usually
carried under the RICS form of contract
where the more stringent term Practical
Completion solves this problem. However
public building works are carried out under
the Government forms of contract and in
such cases the less stringent substantial
completion may lead to difficulties.
As a final point, some forms of contract in
Hong Kong appear to adopt a combination
of these terms. A private developer's
contract which I saw recently, was based on
the RICS form, but had an amended
completion clause which provided that the
Architect will issue a Practical Completion
Certificate when the works are substantially
complete. Careful reading of that clause,
which contained provisions for outstanding
works to be carried out in the Defects
Liability Period, revealed that the
requirement was one of substantial
completion not practical completion despite
the mixed wording.
Surveyors, when preparing contract
documentation need to ensure that the level
of completion specified meets the
employer's occupational requirements to
avoid potential difficulties in the future.
(Adopted from
November 1998)

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